Admiral Taverns confirms bank re-structuring

By The PMA Team

- Last updated on GMT

Related tags: Admiral taverns, Lloyds banking group, Bank of scotland, Hbos

Admiral: debt for equity swap
Admiral: debt for equity swap
Admiral Taverns has released a short statement confirming that is is working on a financial restructuring which will provide a stable platform for...

Admiral Taverns has released a short statement confirming that is is working on a financial restructuring which will provide a stable platform for the business.

A spokesman said: "The plan does not involve any job losses, and it is intended that all payments to suppliers and contractors will continue to be made in the normal course of business. A further update will be issued when appropriate."

The statement follows news that Lloyds Banking Group is set to swallow a £600m debt-for-equity swap at tenanted pub company Admiral Taverns, in the latest fallout from the banking group's ill-fated merger last year with rival HBOS.

The deal, which could come in the form of a pre-pack administration, comes after it fell behind on repayment of more than £1b in debts.

A so-called pre-pack administration is one of the arrangements being considered and an announcement is due to be made as soon as today.

Under control of the Landesberg and Rosenberg families and with loans from Bank of Scotland, Admiral made a string of acquisitions of sround 3,200 bottom-end pub estates from the likes of Punch Taverns, Enterprise Inns and Greene King, transforming it into the UK's third-largest leased and tenanted pub operator.

The company forecast a 7% drop in be volumes before the start of the smoking ban but has ben hit by far larger drops than that. 

Under a debt-for-equity swap, Lloyds is expected to take a stake of just under 50 per cent in return for writing off some of the debt. Lloyds does not want to take a majority stake in Admiral in order to avoid having to consolidate the pub group's accounts into its own, according to the Financial Times​.

Admiral raised around £100m last year through pub sales — it is thought pubs were selling for around an average of £330,000. Sources indicate that pub sale values have dived this year to below and average of £200,000.

The company is divided into three divisions — core, turnaround and disposal. The turnaround division, which is run by Peter Brook, is thought to have seen barellage halve over three years from around 150 barrels to 75 barrels, although that figure is thought to include closed pubs.

Admiral was spending an annualised total of £5m a year on the cost of closed pubs earlier this year. Accountants PricewaterhouseCoopers had been working on behalf of Lloyds Banking Group, which inherited the Admiral loans in the wake of its takeover of HBOS, and was seeking a new equity investor in the business.

One source said: "There is a decent core business of at least 1,000 pubs.

"One problem is that beer volumes have been in freefall and the alternative use market seems to be a lot weaker this year than last year." It is thought that Admiral produces annualised Ebitda of just over £50m a year making it worth around £400 to £500m at best.

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